John Major urges Jeremy Hunt to prioritise defence spending over tax cuts in Budget

Former prime minister Sir John Major has called on Jeremy Hunt to prioritise extra spending on defence over tax cuts in Budget.

The extraordinary intervention by the former Conservative leader lays down a challenge to the chancellor just days before he unveils his plans.

Mr Hunt is set to defy calls to give the Ministry of Defence more money at the same time as he uses tax cuts to try to woo voters before the election.

But Sir John said more money must go to the Armed Forces in the wake of Russia’s invasion of Ukraine and rising tensions in the Middle East.

Asked whether defence spending should be Mr Hunt’s priority, he said: “That would be my choice. We face a real difficulty, both with defence and some public services. Usually when defence spending increases, it is because a threat is evident. There is a threat that is evident.”

Britain would “be making a mistake over the next few years if we turn away from the necessary expenditure that must go into the armed forces,” he added during a discussion at the Global Soft Power Summit in Westminster on Thursday.

His comments echo calls from other senior Tories for more cash for defence.

Ex-defence secretary Ben Wallace said the UK needed more cash for defence “or we will not be ‘match-fit’ for the conflicts to come”.

Commons Leader and former defence secretary Penny Mordaunt told Mr Hunt this week that the government’s “first duty” was to protect the UK.

The UK currently spends just over 2 per cent of GDP on the defence budget. The government has said that it has an ambition to increase that figure to 2.5 per cent in the longer term. However, it has refused to put a date on when that might be.

In response to the comments by the former prime minister, a Treasury source said: “A growing economy means we can sustainably fund public services into the long term.”

Jeremy Hunt is set to use next week’s Budget to scrap the non-dom tax loophole, which lets foreigners living in Britain avoid paying tax on overseas earnings.

The rule was thrust into the spotlight when The Independent revealed that Akshata Murty, prime minister Rishi Sunak’s wife, had used it to save potentially millions of pounds.

Scrapping the perk is a flagship policy of the Labour Party, which has promised to pay for NHS reform and school breakfast clubs with the money that would be raised.

But the chancellor is thought to be planning to use the income to fund national insurance or income tax cuts.

Labour believe scrapping the non-dom tax break would raise around £2bn, but if Mr Hunt does scrap or drastically alter it, Sir Keir Starmer’s team will have to find the money to fund the pledges from elsewhere.

Mr Hunt is also reported to be considering extending the windfall levy on North Sea oil and gas – another Labour policy – to fund tax cuts elsewhere.

A shadow minister said they were not surprised by the government’s apparent change in stance on the non-dom loophole, claiming they had “never had a strong argument about why they were keeping it”.

They added: “It looks like they are running out of other options and are desperate to find room for tax cuts to please the right of the party.”

With the Conservatives facing defeat at the general election, Mr Hunt is under pressure to find the cash for a cut to income tax or national insurance.

He is said to prefer a national insurance cut, as well as a vape tax.